Examination of Witnesses (Questions 80
TUESDAY 30 NOVEMBER 1999
80. Are you tending towards a sort of lower
level type of tax to fund this work to change practice, rather
than a hard-hitting tax which seems to knock demand right out?
(Dr Leinster) Yes.
81. You are thinking of the former.
(Dr Leinster) Yes, the former.
82. I am not quite clear about your position
on that. You said just a few moments ago that you were in favour
of a banded tax.
(Dr Leinster) Yes.
83. Yet you also appear to be saying now that
you are in favour of a low level uniform tax.
(Dr Leinster) No, I did not say that. We said a tax
which was used to educate, not necessarily a high level of tax,
but you can still have a banded tax within that regime.
84. That seems to get the worst of both worlds.
If you have a low level tax which is also banded, the bands have
to be small distances apart, the bands are going to be very narrow.
As I understood the argumentand maybe I have got it wrongit
is that there is an argument between on the one hand a fairly
comprehensive tax, which is banded and complicated and so forth,
and on the other hand a rather low level, by definition rather
flattish tax which is hypothecated.
(Mr Palmer) May I suggest that we actually see this
as something we are into for the long term? I noted you asked
some of the earlier people giving evidence about how long it might
take to develop such a tax, which is a very fair point. We certainly
see that introducing a fairly simple tax which would ideally be
banded and it might be a much simpler banding system than that
proposed by ECOTEC, at a low level, is a way into this route.
We see this tax as part of a programme of work which includes
the kind of improvement of our monitoring that Mr Killeen mentioned
a few moments ago, improving the information base and the education
base available to the agriculture industry and to other sectors
which use pesticides. That would be consistent with starting at
a low level and monitoring and reviewing how the tax is actually
85. That means you are abandoning the objective
of influencing behaviour directly by the high level of the tax.
You are settling for a low level tax which is hypothecated and
therefore funds research and training which can have an indirect
(Mr Palmer) It is very difficult to argue precisely
about the actual direct effect of the tax. We heard a lot of discussion
earlier today about elasticities and uncertainty about elasticities.
Certainly, yes, I could probably accept that the short-term elasticities
are very limited and therefore some idea that a high tax is going
to result in a major change in behaviour, may not be most effective.
That is not to say that there would not be long-term elasticities
so that over time one would see the agricultural sector, say,
working to develop new techniques which reduced their inputs of
pesticides or introducing capital solutions which might protect,
say, against accidental spillages, which is an issue in itself.
86. Did I get a feeling from Dr Leinster's comments
that because you were replacing charges which you regard as inefficient,
this was the more efficient way of doing what is being done at
the moment? Would that be fair?
(Dr Leinster) There are different mechanisms at play
here. In terms of the herbicide and also maybe local authority
use of these materials, then you have an issue of diffuse pollution
which you are trying to control, which we need to understand more
about, which we need to define how we best control it. So you
have a tax which is similar to the charge for discharge system
that we have for point source discharges, which funds base level
work of monitoring research, education. That would be one aspect
of it. You have a separate issue, which is to do with how you
deal with the particular issue of sheep dip chemicals where you
have thousands of small users and how it is best to raise the
revenue from that discrete group of users. There are two different
ways of using the similar sort of instrument.
87. This tax seems to disappear every time I
try to get my hands round it. It is complicated, it is simple,
it is low level, it is high level, it is hypothecated, it is not.
We are in a very difficult area. While no doubt I am sure that
the biodiversity trends are very alarming, are you really convinced
that a tax is an appropriate thing to go for in the near future,
in the next year or two?
(Dr Leinster) We believe that for the reasons we gave
you can send clear signals by using a banded tax. If you use a
banded tax it does not need to be the scheme which is outlined
within the report, it could be simpler than that. You can send
clear messages that one type of material is better than another
type of material or is less harmful than another type of material.
You can actually signal messages which then make people make conscious
decisions about what to use in a particular situation. You can
do that. There is a need to understand the whole question of pesticides
and the environment better and we need some form of funding for
that. On the polluter-pays principle, then the users of those
materials could be charged so that we can raise the funds to understand
those issues. Within that hypothecation is important for those
reasons to fund this work. There is then a separate issue but
still a tax related issue to do with pesticides associated with
what is the best mechanism for raising charges so that we get
adequate control of the ground water issues associated with the
use of sheep dip chemicals.
88. Is there not a European-wide issue here
though as well? Unless we take some measures across the European
Union, do we not then just end up importing food which has been
produced in an environmentally unfriendly way in another country
because they are not taking on the extra costs that we are seeking
to put on our own producers?
(Mr Palmer) There is indeed such a question as speakers
earlier have said. Of course pesticide taxes have been introduced
in a number of other Member States and indeed with the potential
addition of France come next year. Secondly, the type of directives
which we are actually monitoring for and testing against will
also apply in other European countries so that similar pressures
will be placed on other European countries to deal with these
issues. We believe that that puts an onus on us in this country
to apply these in as efficient a manner as possible. That is where
the notion of the economic instrument comes in and may contribute
to that efficiency, so helping to counter the kind of undesirable
result of effectively pushing the pollution somewhere else and
also reducing the actual economic output here at the same time.
89. Coming through from all the contributors
this morning we have certainly heard that there is a lack of reliable
information from which we can base what the effects of pesticides
on biodiversity are. That has come through in each of the three
sets of contributions. That would strengthen your argument for
more research and on the basis of the polluter-pays principle
then there is a logic to extracting that money in one way or another,
whether it is taxation or charging from the users of the pesticide.
That is setting aside any effective taxation on altering the way
people behave. Then, when we want to talk about whether the tax
level should be low or high, if it is to fund this research, do
we not need to know how much money is required for how much research
in order to understand what the tax level should be? I have not
seen any numbers produced. What about the water consumer? We have
heard in the last contribution that several hundred water consumers
are apparently paying several hundred million pounds per year
to clear up pesticides. If that is going to come out of any polluter-pays
principle then the level of taxation, nothing to do with affecting
behaviour, would be fairly high I should imagine. Has anyone worked
out any of the figures?
(Mr Killeen) To answer your initial point in terms
of giving some sort of indication of how much research is needed,
you are right, that a lot of our monitoring has to be targeted
at the aquatic environment, but it has not been geared specifically
to target impacts of pesticides. What we have tried to do is establish
collaborative forum with other organisations which do monitor
the impact of pesticides. What we are attempting to do is pull
information together in a report early next year which will actually
paint a much better picture because the Agency only comprise part
of that picture. I am confident out of that picture will emerge
some better insight as to what still needs to be done to assess
overall the research needs, to assess the true impacts of pesticides
from a wide variety of uses. That information will be forthcoming.
Just to give some indication, we will probably spend in the order
of half a million pounds a year on research related to pesticide-type
activity. It is quite a substantial commitment already, yet there
are still many questions to be asked and we cannot answer those
questions in isolation.
Mr Jones: What is the level of money that you
require for your research?
90. Do not pitch too low.
(Mr Palmer) May I pick up on your other point as well
which is the question about water consumers paying? In the evidence
we submitted to you previously we cited anecdotally the case of
Wessex water who were spending in excess of £100 million
on this. It is quite clearly desirable that one should make the
polluter pay. It may of course be the case that water consumers
will actually have to continue to pay for some time in order to
clean up historical residues of past practice or to provide some
kind of safety buffer against accident or anything like that happening
which, because it would take time for new regulations, time for
the tax, time for measures associated with the tax as part of
that package, to take effect in the environment, is simply what
one would expect in dealing with a problem like this.
91. May I pick up that comment because it has
not been much touched on and it takes us back really to the questions
I was asking at the start. To what extent might you take the viewif
there is no evidence about this just say sothat the current
problem is that the use of pesticides has proceeded over such
a prolonged period in this country, it is after all not exactly
something new, that notwithstanding the apparent changes in pesticide
weight which are taking place, the accumulation in the environment
is such that that is the reason why you are not seeing any of
the knockon consequences you expected in terms of reduction.
(Mr Killeen) The major challenge we have is that the
reality of the situation is that whilst we have good information
about the levels in pesticides, we have no real indication as
to the combined effects of those levels of pesticides and that
is why we are concerned not to see a reduction of overall levels
in the environment over a five-year period. The environmental
load seems to be maintained, we know we do not have the systems
in place to assess the impact by bringing together the expertise
and data sets from other organisations, yet still things are not
getting any better. We have no obvious solutions to deal with
some of these problems.
92. Not only are they not getting any better,
but they are getting quite a lot worse.
(Mr Killeen) In terms of the actual levels in the
environment and in terms of observed levels from diffuse pollution,
they seem to be reasonably stable.
93. I am thinking of biodiversity.
(Mr Killeen) In terms of the number of compounds failing
standards, we set quality standards as in Europe to protect the
environment, each year we get more standards so there is more
against which to compare those levels and they are dramatically
increasing. Those standards provide surrogate protection until
we have systems in the real environment to measure the true impacts.
We are some way off that. To answer your question, millions and
millions of pounds are required to deal with this issue.
Chairman: We shall leave on that interesting
note. Thank you very much indeed.